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Venezuela Food and Drink Report Q2 2009Published by: Business Monitor International Published: Apr. 16, 2009 - 62 Pages Table of Contents
AbstractDespite the current problems facing Venezuela, per capita food consumption (food and drink, excludingalcoholic drinks) is expected to grow over the next few years. This is likely to be driven partly byincreased prices owing to rocketing inflation but also by the continued redistribution of the country’s oilrevenues to the poorer parts of the population. Per capita food consumption in US dollar terms is,therefore, expected to grow by 72.9% over the five-year forecast period, to reach US$1,092 in 2013,driven by the rapidly expanding population. However, although disposable incomes have grown in recentyears, Venezuela’s economy looks vulnerable to falling oil prices, which could cause the state to cut backon welfare programmes, reducing purchasing power among the poorer segments of society.With high levels of inflation in the economy, there are also concerns over rising food prices, which couldcause discontent among poorer Venezuelans, who form the core of President Hugo Chávez’s support.Indeed, there are now fears that there could be a spate of nationalisations, in sectors such as foodproduction. New laws declare that food production is a public good and gives the state the power toappropriate any goods that do not meet this standard. In essence, this gives the government the power toappropriate food producers without the approval of the National Assembly. Indeed, at the beginning of March 2009, Chávez ordered military troops to seize control of riceprocessing mills in his latest attack on the country's private food sector. Chávez has accused producers ofhoarding supplies and avoiding government imposed price caps and has warned that companies that donot comply with output demands could be permanently appropriated. Eleven companies, includingEmpresas Polar and Cargill have been targeted. Many producers claim that they are unable to make aprofit while operating under price caps introduced some years ago, and resulting food shortages have ledto numerous spats between the food sector and the government. These shortages, along with the high costof living, are a major threat to the president's popularity and Chávez has become increasingly radical inhis attempts to take control of the food industry. After a two-year-long nationalisation drive that hasincluded energy, telecoms, steel and cement companies, Chávez now appears to be moving on to foodproduction, one of the last strategic sectors of the economy still largely in private hands. Venezuela is ranked in last place in BMI’s Business Environment Ratings for the Latin America region,due primarily to government-imposed obstacles such as price controls and import restrictions. The threatof state appropriation of leading producers is only likely to scare off interested investors further. Indeed,the latest episode with Chávez ordering military seizure of the rice processing mills owned by EmpresasPolar and Cargill will only reinforce a trend to investment away from the country’s food and drink sector. Get Full Details About This Report >> |
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